Pre WWI: Ottoman Empire controls Israel-Palestine (IP). The region is mostly Muslim and Christian with Jewish minority with Jerusalem being split nearly evenly between the 3 religions.
WWI: The UK and France partition the ottoman Empire and IP(now Palestine) is in British territory. Anti-semetism arrives in the UK but not to the extent where Jews were killed. The Jews just leave to IP/ Jewish Palestine. Some Jews from other places arrive their too, like Germany, Poland, Africa and even parts of Asia.
WWII: There are so many Jews in IP/Jewish Palestine that the region gets partitioned into a Jewish state and a Muslim state. Israel and modern Palestine are born.
1967: The Muslim states try to destroy Israel. They fail and Israel takes a war prize for withstanding the attack.
Later: The Muslims try again, and fail again. Israel takes a war prize so big that the UN thinks that this war prize is a too big war prize and the war prize gets reduced to no war prize at all, except for partial control of the West bank(WB) and Gaza(GA).
Now: Israel controls the Israeli Bloc and partial control over WB, GA, and Golan. WB wants independence again, Golan wants to be Syrian again and Gaza just wants to start a war.
Israel should exist. They are a place for the Jews to live and if it doesn't exist, Judaism would be likely to become almost non existent. I say this as a non jew.
I am completely in favor of Israel existing as a state. I, however, advocate for a two state solution, as I feel that it solves better for long term peace in the region.
Our main objective here should be to decrease regional tensions, because these tensions seem to be causing all the violence in the region. The two state solution solves better than the one state solution in this regard, because it answers the basic demands of both parties. The problem with the two state solution is that both sides are unnecessarily greedy, and they demand more just to spite the other side.
But let's take a look at Israel specifically. Israel claims itself to be a "Jewish democracy" that conducts most things through the principles of Judaism. This is bad because it alienates the significant Arab minority within Israel that has always lived in the area. You might ask, "Well why can't they move?" I don't believe that it is moral or fair to essentially uproot groups of people because of unfair policies. Overall, this practice just makes the entire situation worse, creating more Palestinian sympathizers and fueling the Israeli-Palestine conflict.
Here's the alternative: Israel becomes secular, even if it's only in name. That way, the Arab minority will feel more content with living and prospering in Israel, while the Jewish majority will be free to practice as usual. It's a win-win! Look to India as an example. India has the highest number of Hindus in the world, yet it is a secular state. Nepal and Mauritius, the two other countries in the world with a Hindu majority, are also secular. India also has a huge Muslim population, almost rivaling that of Pakistan. Over time, the relationship between Indian Hindus and Muslims has gotten much better, although its conflict with Pakistan has not gotten any better.
The situation with Israel and Palestine is very similar to that of India and Pakistan. Let us take the good things that happened with the Partition, that is, the formation of a secularized Indian state, and apply it to the situation in Israel. But let us also prioritize strong foreign relations between Israel and Palestine, something which India and Pakistan sorely miss.
Don't get me wrong - I'm not one of those Palestinian hate-mongers. I'm an observant American, and I'm just sharing my input.
TL;DR - It's better to have Israel as a secular state because it would be in a better position to negotiate with Palestine and ease the conflict, and it would cause much less civil unrest within Israel as well.